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    Allowable Deductions Enumerated in The Philippines Tax Code

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    wela
    The document outlines allowable deductions under the Philippines Tax Code, including ordinary and necessary trade expenses, expenses for private educational institutions, optional treatment of interest expenses, limitations on foreign tax credits, adjustments for paid versus incurred taxes, the year foreign tax credits can be taken, and proof required for foreign tax credits. Key details include that foreign tax credits are limited to the same proportion of taxes paid abroad as the foreign source income is to total income, credits must be redetermined if taxes paid differ from claimed amounts, and the taxpayer must provide information to verify foreign tax credits.

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    Allowable Deductions Enumerated in The Philippines Tax Code

    Uploaded by

    wela
    4 views2 pages
    The document outlines allowable deductions under the Philippines Tax Code, including ordinary and necessary trade expenses, expenses for private educational institutions, optional treatment of interest expenses, limitations on foreign tax credits, adjustments for paid versus incurred taxes, the year foreign tax credits can be taken, and proof required for foreign tax credits. Key details include that foreign tax credits are limited to the same proportion of taxes paid abroad as the foreign source income is to total income, credits must be redetermined if taxes paid differ from claimed amounts, and the taxpayer must provide information to verify foreign tax credits.

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    Allowable deductions

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    Allowable Deductions Enumerated in the Philippines Tax Code

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    The document outlines allowable deductions under the Philippines Tax Code, including ordinary and necessary trade expenses, expenses for private educational institutions, optional treatment of interest expenses, limitations on foreign tax credits, adjustments for paid versus incurred taxes, the year foreign tax credits can be taken, and proof required for foreign tax credits. Key details include that foreign tax credits are limited to the same proportion of taxes paid abroad as the foreign source income is to total income, credits must be redetermined if taxes paid differ from claimed amounts, and the taxpayer must provide information to verify foreign tax credits.

    Copyright:

    © All Rights Reserved
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    Flag for inappropriate content
    Download as docx, pdf, or txt
    4 views2 pages

    Allowable Deductions Enumerated in The Philippines Tax Code

    Uploaded by

    wela
    The document outlines allowable deductions under the Philippines Tax Code, including ordinary and necessary trade expenses, expenses for private educational institutions, optional treatment of interest expenses, limitations on foreign tax credits, adjustments for paid versus incurred taxes, the year foreign tax credits can be taken, and proof required for foreign tax credits. Key details include that foreign tax credits are limited to the same proportion of taxes paid abroad as the foreign source income is to total income, credits must be redetermined if taxes paid differ from claimed amounts, and the taxpayer must provide information to verify foreign tax credits.

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    ALLOWABLE DEDUCTIONS (a) The amount of the credit in respect to the

    ENUMERATED IN THE PHILIPPINES tax paid or incurred to any country shall not
    TAX CODE exceed the same proportion of the tax
    against which such credit is taken, which the
    taxpayer's taxable income from sources
    within such country under this Title bears to
    1. Ordinary and Necessary Trade,
    his entire taxable income for the same
    Business or Professional Expenses
    taxable year; and
    a. In general – There shall be
    allowed as deduction from gross (b) The total amount of the credit shall not
    income all the ordinary and exceed the same proportion of the tax
    necessary expenses paid or against which such credit is taken, which the
    incurred during the taxable year taxpayer's taxable income from sources
    in carrying on or which are without the Philippines taxable under this
    directly attribute to, the Title bears to his entire taxable income for
    development, management, the same taxable year.
    operation and/or conduct of the
    trade, business or exercise of a 5. Adjustments on Payment of Incurred
    profession Taxes – If accrued taxes when paid
    differ from the amounts claimed as
    2. Expenses Allowable to Private
    credits by the taxpayer, or if any tax
    Educational Institutions – In addition paid is refunded in whole or in part,
    to the expenses allowable deductions the taxpayer shall notify the
    under this Chapter, a private Commissioner; who shall re-
    educational institution, referred to determine the amount of the tax for
    under Section 27 (B) of this code, the year or years affected, and the
    may at its option elect either: (a) to amount of tax due upon such re-
    deduct expenditures otherwise determination, if any, shall be paid
    considered as capital outlays of by the taxpayer upon notice and
    depreciable assets incurred during demand by the Commissioner, or the
    the taxable year for the expansion of amount of tax overpaid, if any, shall
    school facilities or (b) to deduct be credited or refunded to the
    taxpayer. In the case of such a tax
    allowance for depreciation thereof
    incurred but not paid, the
    under Subsection (F) hereof.
    Commissioner as a condition
    3. Optional Treatment of Interest precedent to the allowance of this
    Expense – At the option of the credit may require the taxpayer to
    taxpayer, interest incurred to acquire give a bond with sureties satisfactory
    property used in trade business or to and to be approved by the
    exercise of a profession may be Commissioner in such sum as he
    allowed as a deduction or treated as a may require, conditioned upon the
    capital expenditure. payment by the taxpayer of any
    4. Limitations on Credit – The amount amount of tax found due upon any
    of the credit taken under this Section such redetermination. The bond
    shall be subject to each of the herein prescribed shall contain such
    following limitations:
    further conditions as the
    Commissioner may require.

    6. Year in Which Credit Taken – The


    credits provided for in Subsection
    (C) (3) of this Section may, at the
    option of the taxpayer and
    irrespective of the method of
    accounting employed in keeping his
    books, be taken in the year which the
    taxes of the foreign country were
    incurred, subject, however, to the
    conditions prescribed in Subsection
    (C)(5) of this Section. If the taxpayer
    elects to take such credits in the year
    in which the taxes of the foreign
    country accrued, the credits for all
    subsequent years shall be taken upon
    the same basis and no portion of any
    such taxes shall be allowed as a
    deduction in the same or any
    succeeding year.

    7. Proof of Credits – The credits


    provided in Subsection (C)(3) hereof
    shall be allowed only if the taxpayer
    establishes to the satisfaction of the
    Commissioner the following:

    (a) The total amount of income derived from


    sources without the Philippines;

    (b) The amount of income derived from each


    country, the tax paid or incurred to which is
    claimed as a credit under said paragraph,
    such amount to be determined under rules
    and regulations prescribed by the Secretary
    of Finance; and

    (c) All other information necessary for the


    verification and computation of such credits.

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